Legislature(1995 - 1996)

03/16/1995 01:40 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
               SENATE LABOR AND COMMERCE COMMITTEE                             
                         March 16, 1995                                        
                           1:40 P.M.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Senator Tim Kelly, Chairman                                                   
 Senator Mike Miller                                                           
 Senator Jim Duncan                                                            
 Senator Judy Salo                                                             
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
 Senator John Torgerson, Vice Chairman                                         
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
 SENATE BILL NO. 108                                                           
 "An Act relating to the powers and duties of the commissioner of              
 commerce and economic development concerning the Alaska Tourism               
 Marketing Council; relating to the per diem and travel expenses of            
 the council's board of directors; relating to the powers and duties           
 of the council; extending the termination date of the council; and            
 providing for an effective date."                                             
                                                                               
 SENATE BILL NO. 100                                                           
 "An Act relating to unfair discrimination against a physician                 
 assistant or acupuncturist under a group health insurance policy."            
                                                                               
 SL&C 3/16/95                                                                  
 SB 104 (JOINT INSURANCE ARRANGEMENTS) was scheduled, but not taken            
 up this date.                                                                 
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Mary Jackson, Legislative Aide                                                
 Senator John Torgerson                                                        
 State Capitol                                                                 
 Juneau, AK 998-1-1182                                                         
  POSITION STATEMENT:   Commented on SB 108.                                   
                                                                               
 John Litton, Vice President                                                   
 Government Relations                                                          
 Alaska Visitors Association                                                   
 211 Crabapple Dr.                                                             
 Sitka, AK 99835                                                               
  POSITION STATEMENT:   Supported SB 108.                                      
                                                                               
 Bob Dindinger, Vice Chairman                                                  
 Alaska Tourism Marketing Council                                              
 9085 Glacier Hwy., Suite 204                                                  
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   Supported SB 108.                                      
                                                                               
 Jeff Bush, Deputy Commissioner                                                
 Department of Commerce and Economic Development                               
 P.O. Box 110800                                                               
 Juneau, AK 99811-0800                                                         
  POSITION STATEMENT:   Supported SB 108.                                      
                                                                               
 Nancy Lethcoe, President                                                      
 Alaska Wilderness, Recreation, and Tourism Association                        
 Valdez, AK                                                                    
  POSITION STATEMENT:   Supported SB 108.                                      
                                                                               
 Fred Dure                                                                     
 Adventure Tours                                                               
 536 W. 19th                                                                   
 Anchorage, AK 99503                                                           
  POSITION STATEMENT:   Supported SB 108.                                      
                                                                               
 Tina Lindgren, Director                                                       
 Alaska Visitors Association                                                   
 3201 C. St., Suite 403                                                        
 Anchorage, AK 99503                                                           
  POSITION STATEMENT:   Supported SB 108.                                      
                                                                               
 Jack Heesch                                                                   
 Alaska Academy of Physicians Assistants                                       
 P.O. Box 201608                                                               
 Anchorage, AK                                                                 
  POSITION STATEMENT:   Commented on SB 100.                                   
                                                                               
 Nick Coti                                                                     
 East Care Acupuncture Clinic                                                  
 230 S. Franklin St. #207                                                      
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   Commented on SB 100.                                   
                                                                               
 Don Koch                                                                      
 Division of Insurance                                                         
 Department of Commerce and Economic Development                               
 P.O. Box 110805                                                               
 Juneau, AK 99811-0805                                                         
  POSITION STATEMENT:   Commented on SB 100.                                   
                                                                               
 Rachel Yates                                                                  
 Alaska Association of Marriage and Family Therapists                          
 1301 1st Street                                                               
 Douglas, AK 99824                                                             
  POSITION STATEMENT:   Supported SB 100.                                      
 Charlie Miller                                                                
 Alaska Regional Hospital                                                      
 P.O. Box 102286                                                               
 Anchorage, AK 99510                                                           
  POSITION STATEMENT:   Commented on SB 100.                                   
                                                                               
 Jerry Reinwand                                                                
 2 Marine Way, #219                                                            
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   Commented on SB 100.                                   
                                                                               
 Reed Stoops                                                                   
 Aetna                                                                         
 240 Main Street                                                               
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   Opposed SB 100.                                        
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 95-12, SIDE A                                                           
 SL&C 3/16/95                                                                  
            SB 108 ALASKA TOURISM MARKETING COUNCIL                           
                                                                              
 CHAIRMAN KELLY called the Senate Labor and Commerce Committee                 
 meeting to order at 1:40 p.m. and announced SB 108 to be up for               
 consideration.                                                                
                                                                               
 MARY JACKSON  Legislative Aide for Senator Torgerson, said SB 108             
 extends the Tourism Marketing Council from December of 1996 to                
 December of 1999 and changes some of the contract terms with the              
 Trade Association to coincide with the revised sunset provision.              
 There is some housekeeping about the authority to sign a contract             
 and it directs the Commissioner to contract with a qualified in-              
 state trade association.  It deletes language regarding out of                
 state travel expenses for association members.                                
                                                                               
 JOHN LITTON, Vice President, Government Affairs, Alaska Visitors              
 Association, said he also sits on the Alaska Tourism Marketing                
 Council and has participated with the Council for the past six                
 years.                                                                        
                                                                               
 MR. LITTON said most of the changes in the language has to do with            
 making the Commissioner more directly responsible for the                     
 contracting authority.  He said he was concerned with the per diem            
 and reimbursement provision.  For example, he traveled on behalf of           
 the Council back to New York meeting with travel editors, which is            
 something they annually do, to try to get stories about Alaska                
 placed in different magazines and newspapers nation-wide.  This is            
 the trip on which he met the president of ABC Network and talked              
 about bringing Good Morning America to Alaska. Shortly, thereafter,           
 there was an audit of their department and it was brought to their            
 attention that reimbursement for his travel to New York was not               
 appropriate.  Travel is specifically supposed to be for in-state              
 council meetings.                                                             
                                                                               
 SENATOR KELLY asked how many board members there were.  MR. LITTON            
 replied there was a total of 21 - ten appointed by the Governor,              
 the Director of the Division of Tourism, and 10 that are appointed            
 by the industry.                                                              
                                                                               
 SENATOR KELLY said he has a problem with the paragraph on                     
 reimbursing 21 members to travel all over the world by just getting           
 the approval of this trade association.                                       
                                                                               
 BOB DINDINGER, Vice Chairman, Alaska Tourism Marketing Council                
 (ATMC), said originally that provision was in the statute so that             
 the Marketing Council would not have its regular meetings outside             
 the State of Alaska.  SB 108 proposes, not to reimburse members for           
 attending the meetings outside the state, but to reimburse a member           
 who is sent by the council to sell Alaska.  They have no intention            
 of holding meetings outside of Alaska.  He also explained that only           
 the council members appointed by the Governor are reimbursed for              
 attending meetings.  The 10 industry members are never reimbursed             
 at state expense.                                                             
                                                                               
 JEFF BUSH, Deputy Commissioner, Department of Commerce and Economic           
 Development, pointed out that lines 7-9 on page 2 state that if               
 board members appointed by the trade associations receive per diem            
 and travel, the trade association has to reimburse the council for            
 it.                                                                           
                                                                               
 MR. DINDINGER said reauthorization of the ATMC was appropriate in             
 the Labor and Commerce Committee, because it's an issue about jobs            
 - about 27,000 primary Alaskan jobs and over 50,000 total Alaskan             
 jobs.  He said this is the only state sponsored program that                  
 addresses the 92% of Alaska visitors that come from the continental           
 United States and Canada.  It addresses visitor demand by all modes           
 of transportation and the needs of both independent travelers and             
 package tour travelers.  In other words, it is a very generic                 
 program.                                                                      
                                                                               
 The primary vehicle of this program is print advertising which                
 consists of approximately 650,000 names to which the Vacation                 
 Planner is sent.  The Vacation Planner lists over 1,000 Alaskan               
 businesses and the nature of their services.                                  
                                                                               
 He concluded saying that they highly recommend reauthorization of             
 the Marketing Council.  The money is well spent and it is well                
 managed.                                                                      
                                                                               
 Number 154                                                                    
                                                                               
 SENATOR KELLY asked if the Marketing Council was funded as a line             
 item in the Department of Commerce budget.  MR. DINDINGER replied             
 that was correct and last year it was about $3,800,000 from the               
 general fund with a 25% match from the industry.                              
                                                                               
 SENATOR KELLY asked what trade association they currently had a               
 trade agreement with.  MR. DINDINGER said that the Alaska Visitors            
 Association was the only one that has ever had a joint management             
 agreement with the state.  They are limited to three state                    
 employees.  SENATOR KELLY said he was the one to put that limit in.           
                                                                               
 SENATOR KELLY asked if the Marketing Council had the budget in                
 their control.  MR. DINDINGER answered that it was and that it was            
 managed under the state procurement system.                                   
                                                                               
 Number 210                                                                    
                                                                               
 SENATOR MILLER noted that over the years he has been a critic of              
 the Alaska Tourism Marketing Council, because they had a tendency             
 to promote just one mode of transportation.  However, he is a co-             
 sponsor of this legislation, because they have done a tremendous              
 job of including all other modes of transportation.                           
                                                                               
 NANCY LETHCOE, President, Alaska Wilderness, Recreation, and                  
 Tourism Association, pointed out that they support reauthorization            
 of ATMC.  They are concerned with the definition of a qualified               
 trade organization, because although the current definition allows            
 without limitation the composition of the ATMC, only those listed             
 specifically are appointed.  Those that are covered by the generic            
 words "without limitation" do not have representation.  She hoped             
 for an amendment with a new definition to fine tune this program to           
 make it better for small Alaskan owned and operated businesses.               
 She also would like to see changes to section c, which is in the              
 House version of this bill, that would give the Governor the                  
 opportunity to appoint more members to ATMC and reduce the number             
 that are from the one trade organization.  She wanted expertise               
 brought to the table from people who are specialists in hunting,              
 sportfishing, wilderness guides and outfitters.                               
                                                                               
 FRED DURE, Adventure Tours, supported reauthorization of ATMC.  He            
 supported Ms. Lethcoe's comments about the definition of a                    
 qualified trade association.  As Alaskan tourism grows, it will be            
 to all of Alaska's benefit to insure that all types of visitors are           
 addressed in the marketing of their destination.                              
                                                                               
 Number 332                                                                    
                                                                               
 TINA LINDGREN, Director, Alaska Visitors Association, supported SB
 108.  She can't see any problem with adding to the definition, but            
 there would still be many segments that would be left out like,               
 gift shops, camp grounds, food and beverage companies, and sight              
 seeing tours.  She pointed out that it is currently part of the law           
 that the Governor shall ensure that appointees are broadly                    
 representative of the different regions of the state and the                  
 various sectors.                                                              
                                                                               
 SENATOR KELLY asked if she currently authorizes travel for AVA                
 board members outside the conventions and such.  MS. LINDGREN                 
 replied that AVA doesn't reimburse their board members for travel.            
 The appointees that AVA has on the ATMC pay their own way to all of           
 the meetings.                                                                 
                                                                               
 MR. BUSH supported SB 108.  He said it's been a successful                    
 partnership and has done a very good job on tourism marketing.  He            
 requested changing "shall" on page 1, line 11, to "may" saying that           
 everyone supported the change.  He explained that the legislature,            
 in passing this legislation, is essentially deciding it is in the             
 best interest of the state to have a cooperative marketing program            
 and they agree.  However, in taking out the best interests                    
 language, there would essentially be no discretion for the                    
 department with respect to entering into this contractual                     
 arrangement.  That language provides the opportunity to negotiate             
 if there is something inappropriate in a contract.                            
                                                                               
 Number 400                                                                    
                                                                               
 SENATOR SALO moved to amend SB 108 on page 1, line 11 to change               
 "shall" to "may."  There were no objections and it was so ordered.            
                                                                               
 SENATOR KELLY said he still has a problem with allowing board                 
 members to travel around the world when their primary business is             
 tourism.  He thought they should pay for their own travel.                    
                                                                               
 SENATOR KELLY asked Mr. Dindinger if he reimbursed Marketing                  
 Council members for their travel to meetings.                                 
                                                                               
 MR. DINDINGER said the paid staff of ATMC (who are state employees)           
 are reimbursed for their travel to the meetings, as are the                   
 Governor's appointees.  He said all of the board members are                  
 reimbursed for their costs to attend the meetings, but the AVA has            
 to reimburse the state for its appointees.                                    
                                                                               
 SENATOR SALO asked what was their budget for out of state travel.             
 MR. DINDINGER said he would have to get that information.                     
                                                                               
 SENATOR KELLY asked if the Governor's appointee members had been              
 reimbursed for traveling outside the State of Alaska on these types           
 of jobs.  MR. DINDINGER answered not to his knowledge.  He said               
 when someone is traveling on behalf of the Marketing Council, they            
 don't get to represent their own business.  They can only represent           
 the collective interest of the travel community within Alaska.  He            
 said they do send people out on those kinds of assignments.  The              
 problem is that it is enough of a burden on the private sector                
 people to attend the meetings at their own expense, but when they             
 are asked to dedicate a week to 10 days of their time to travel               
 around the country on the state's behalf and to pay for the travel            
 expense, that's a bit much.  He said they are often not able to get           
 the people they would like to do that.                                        
                                                                               
 SENATOR KELLY said wasn't that what they had full time employees              
 for.  MR. DINDINGER said some board members had greater depth of              
 experience and better contacts than the employees did.                        
                                                                               
 Number 457                                                                    
                                                                               
 TINA LINDGREN explained what brought this situation about, in                 
 particular, was Good Morning America.  It's very rare that a                  
 council member is asked to do work on behalf of the state.  The way           
 legislation is currently written they can send any person in the              
 state except for members of the council, and reimburse their                  
 travel.  She said their auditors suggested they change the statue,            
 because right now, as it stands, they are inhibiting the council's            
 ability to do the work they have been assigned to do.                         
                                                                               
 SENATOR SALO asked for a ballpark figure how much the change in the           
 statute would cost.  MS. LINDGREN replied that it shouldn't change            
 the budget at all.  Currently, there's $55,000 set aside for travel           
 that probably won't be entirely used.  She guessed they were                  
 talking about a $10,000 for council member travel for one or two              
 trips to New York or the West Coast during a year.                            
                                                                               
 Number 483                                                                    
                                                                               
 MR. LITTON clarified that a board member does not have the ability            
 to just decide they want to go and participate in something and               
 come back.  Any travel that is done by a board member has to be               
 approved by the department prior to the travel, like in any other             
 department.                                                                   
                                                                               
 SENATOR KELLY said he wanted to have more comfort that there                  
 wouldn't be increased travel activity in the future because of the            
 change in this law.                                                           
                                                                               
 SENATOR KELLY said they would hold the bill for amendments on                 
 Tuesday.                                                                      
                                                                               
         SB 100 DISCRIMINATION UNDER GROUP HEALTH INS.                        
  SENATOR KELLY announced SB 100 to be up for consideration and noted         
 there was a proposed committee substitute.  He said there were                
 three sections to this bill and started with the physician's                  
 assistants.                                                                   
                                                                               
 JACK HEESCH, Alaska Academy of Physician's Assistants, said he                
 thought this bill would prevent discrimination by group health                
 insurers among physician's assistants (PA).  This means if a person           
 is licensed by the State of Alaska as a state licensed practitioner           
 and is covered under group policy, then all people with similar               
 licenses must be paid for services.  He believed the bill did not             
 mandate or require coverage of physician's assistant services; it             
 merely says that if an insurer covers PA service, then they must              
 cover all PA's without discriminating among them.                             
                                                                               
 MR. HEESCH said the fiscal affects of this bill are $0.  He also              
 pointed out that this bill did not have adverse comment when it was           
 introduced last year, nor has it this year.  This specific statute            
 was amended in 1992 to provide for psychologists and psychological            
 associates and again, in 1994, to include certified direct entry              
 midwifes - both without adverse comment.                                      
                                                                               
 NICK COTI, East Care Acupuncture Clinic, supported SB 100.  He said           
 his wife is an acupuncturist and a medical doctor and received her            
 training in China.  He said he has recently completed one and half            
 years of graduate study in China and he found that macro economic             
 information supports how effective acupuncture is, not only as a              
 mode of treatment, but as a means of containing costs.  Life                  
 expectancy, health care, and some other things are better in China            
 than in  Washington, D.C., one study concluded.                               
                                                                               
 The World Bank has conducted studies on the nature of the Chinese             
 currency and its value in the economy, in general.  It was found              
 that there was a very reliable correlation between life expectancy            
 and per capita income.  At that time, China had a per capita income           
 of $250 and a life expectancy of 70 years.  One would predict, with           
 a per capita income of $250, a life expectancy of something like 50           
 years.  A life expectancy of 70 years is more consistent with an              
 advanced industrialized economy.  One of the reasons for this is              
 that they have a fully integrated western and Chinese medical                 
 system.  The use of both is encouraged interchangeably.                       
                                                                               
 Current insurance laws make it difficult for people to get                    
 acupuncture, because they have to pay fully out of their pocket to            
 do so.                                                                        
                                                                               
 TAPE 95-12, SIDE B                                                            
                                                                               
 MR. COTI asked the committee to consider very seriously the                   
 importance of taking discrimination against acupuncturists.  He               
 also pointed out that many acupuncturists are receiving either                
 directly or indirectly support from insurance companies through               
 other people who bill for them which is not a very good practice.             
                                                                               
 SENATOR KELLY said they would go on to the third section of the               
 proposed committee substitute.                                                
                                                                               
 DON KOCH, Division of Insurance, commented that there has been a              
 litany of providers added to this section of law over the years.              
 He explained that his department's position on section 1 is that if           
 the provider is performing a service that is covered under a group            
 insurance health policy, and that service is within the scope of              
 his occupational license and practice, then the insurance company             
 should not be able to discriminate against that person.  This does            
 not mandate to the insurer that they provide a specific kind of               
 coverage that is particular to one practitioner.  It does say that            
 if whatever you do provide coverage for can be provided by multiple           
 kinds of practitioners, then you have to treat them equally.                  
                                                                               
 MR. REINWAND, Blue Cross, asked if this means you can't have                  
 preferred provider arrangement with different fee schedules within            
 a group like doctors and hospitals.                                           
                                                                               
 MR. KOCH replied that at this time, he believed there does not                
 exist authorization for preferred provider arrangements in statute            
 - with the exception that, in the case of hospital medical service            
 corporations (for example Blue Cross and Blue Shield), they are               
 directly the provider who through contracts with practitioners                
 provide a service.  So you can have, in effect, a different level             
 of coverage for the entity with whom the Blue Cross, Blue Shield,             
 Hospital Service Corporation, is in contract with versus the piece            
 in their policy that provides for indemnification for other kinds             
 of services that they're not under contract with a provider for.              
                                                                               
 SENATOR SALO asked when he talked about "not discriminating" did he           
 mean between providers within the same category or between a                  
 variety of providers like acupuncturist, medical doctors, etc.  MR.           
 KOCH replied that it was between all the different providers.  He             
 explained that typically a hospital medical service corporation               
 will enter into contracts with hospitals and, generally, with                 
 medical doctors.  They may have arrangements in some cases where              
 they go to other practices as well.  In that case, you're going to            
 have a level of care that can be stated in the policy that may be             
 greater than the level of care you would provide on an                        
 indemnification basis.  He said they may limit coverage to the care           
 provider who was "first in line" to give treatment.                           
                                                                               
 Number 501                                                                    
                                                                               
 SENATOR DUNCAN asked if Mr. Heesch agreed with Mr. Koch's                     
 testimony.  MR. HEESCH answered that he didn't.  SENATOR DUNCAN               
 restated that Mr. Heesch's understanding of adding physician's                
 assistants meant you have to treat all physician's assistants the             
 same.  What Mr. Koch's understanding of the unfair discrimination             
 is that if you have a headache, you should be able to go to anyone            
 who is licensed to practice in the state who could cure that                  
 headache.   MR. KOCH replied that was correct.                                
                                                                               
 SENATOR DUNCAN asked if the list of providers is necessary to be              
 included in the bill.  MR. KOCH replied that he would take out the            
 list of providers and put in some generic language that says, "if             
 the practitioner is operating within the scope of his license, and            
 the event that is triggering his care is within the scope of his              
 practice."                                                                    
                                                                               
 SENATOR DUNCAN asked if that had been suggested in the past,                  
 because there is the problem of continuously adding to the list and           
 then there are providers who aren't being recognized by the                   
 insurance industry, although they are certified and licensed.  MR.            
 KOCH answered no, their deputy director, Thelma Walker, recently              
 asked the same thing.                                                         
                                                                               
 SENATOR DUNCAN said just adding "physician assistant" wasn't                  
 solving the problem the physician assistants were concerned with.             
 MR. KOCH agreed and said there was one more issue which is, in some           
 cases, some of the items have been added to the list, but the scope           
 of practice is not particularly clear.                                        
                                                                               
 SENATOR KELLY announced an at ease at 2:35 - 2:43.                            
                                                                               
 RACHEL YATES, Alaska Association of Marriage and Family Therapists,           
 said they are licensed clinical professionals and provide a                   
 comparable service to psychological associates and clinical social            
 workers.  She asked to be added to the list in the bill.                      
                                                                               
 CHARLIE MILLER, Alaska Regional Hospital, supported SB 100.  Alaska           
 Regional Hospital has a very well defined scope of service.  They             
 are well established, highly regulated, certified, and licensed               
 facilities.  They are primary providers of health care in the state           
 and requested to be added to the list of providers.                           
                                                                               
 MR. MILLER noted there was a question about them being an                     
 institution rather than an individual, but he did not think this              
 was significant.                                                              
                                                                               
 SENATOR SALO said it looked like listing hospitals would start a              
 whole other list, because there are nursing homes, clinics, etc.              
 MR. MILLER said that usually a clinic is included with a                      
 physician's billing.  SENATOR SALO said that wasn't necessarily the           
 case, because many clinics offer surgical services where they do              
 bill separately.                                                              
                                                                               
 SENATOR SALO said some insurance companies prefer using Providence            
 in Anchorage and asked if that would be prohibited.  MR. MILLER               
 said a lot of programs are regulated by federal law.  There are no            
 provisions for preferred provider agreements in the indemnity                 
 insurance, as Mr. Koch said, in AS 21.36.090.  The ones that are              
 allowed are in  AS 21.87.                                                     
                                                                               
 MR. KOCH added that AS 21.36.090 does apply to both an insurance              
 company and a medical service corporation.  The reason is because             
 there is a reference in 21.87 back to 21.36. saying it picks it up.           
 In addition, there is language that talks about "group disability             
 policy" and "group service for an indemnity type contract."  "Group           
 service" is the language that should be used to pick up the                   
 contract that a hospital medical service corporation uses; and the            
 term "policy" used for the contract and insurance companies issues.           
 Both are covered by the language in AS 21.36.090.                             
                                                                               
 SENATOR DUNCAN asked if he was saying that nowhere in statute is              
 there a provision for preferred provider networks in this state for           
 insurers, for example, Aetna.  MR. KOCH agreed, but said Blue Cross           
 and Blue Shield could, because they are a medical service                     
 corporation.  The way they could be viewed as a preferred provider            
 is that those that they enter into a contract with to provide                 
 services may be recompensed under their contract at a different               
 level than those they don't have a contract with, but have the                
 ability to be picked up as an indemnifier.                                    
                                                                               
 SENATOR DUNCAN commented, then, that under the way our statutes are           
 presently written, and with the movement towards managed care                 
 networks in the country, Alaska is really in a very weak position             
 to have managed care.  MR. KOCH said that was absolutely correct              
 and if this is what they want, he has a copy of a model bill that             
 may address that issue.                                                       
                                                                               
 SENATOR KELLY asked how this affects the arrangement that Aetna has           
 with Providence Hospital.  MR. KOCH said he contends that Aetna               
 could enter into those kinds of arrangements with self insurers,              
 because the insurance code provides no impediment to a self                   
 insurer.                                                                      
                                                                               
 SENATOR DUNCAN asked if they were sure there were no PPO's in this            
 state that are in violation of the law right now.  MR. KOCH replied           
 that no, they are not.  If there are PPO's written by insurers of             
 this state, they may well be in violation of the statutes.                    
                                                                               
 REED STOOPS, Aetna, said that Aetna does have PPO agreements, and             
 have had them for years in Alaska.  They believe the statute                  
 permits those agreements.  The Division of Insurance has approved             
 policies with those provisions and there has never been any attempt           
 to prohibit Aetna from doing it.                                              
                                                                               
 MR. STOOPS said there are other statutes in other states that have            
 litigated this question before and courts have determined that                
 unfair discrimination does not mean that one cannot have a PPO                
 agreement.                                                                    
                                                                               
 What he thought the issue really was, was an attempt by Alaska                
 Regional Hospital to clearly prohibit a PPO agreement.  He thought            
 PPO agreements were in the public interest; they are common                   
 practice in the rest of the country and provide lower cost                    
 insurance for Aetna's clients.                                                
                                                                               
 Number 334                                                                    
                                                                               
 SENATOR DUNCAN asked if the Municipality of Anchorage is self-                
 insured.  MR. STOOPS said they are not self insured.                          
                                                                               
 SENATOR DUNCAN asked who their contracts are with.  MR. STOOPS                
 replied that they have a PPO with Providence, although not for all            
 clients.  They also have a PPO agreement with some doctors and                
 dentists in Anchorage.                                                        
                                                                               
 SENATOR DUNCAN wanted to ask the Division of Insurance to respond             
 to the testimony that they have been approving contracts that they            
 think are in violation of the law.                                            
                                                                               
 Number 284                                                                    
                                                                               
 MR. KOCH responded that they have written to Aetna and told them              
 that these arrangements are not legal; some have been disapproved.            
 If any have been approved, it has happened inadvertently.  He said            
 Mr. Stoops is correct that they presented some arguments that place           
 somethings into question.  They haven't gone to court to contest              
 it, because there were discussions going on about it in the                   
 legislature.                                                                  
                                                                               
 MR. STOOPS said there was no doubt that this particular amendment             
 will strengthen the case.  He said he would like to have someone              
 from Aetna testify about which customers are included under PPO               
 arrangements now.                                                             
                                                                               
 JERRY REINWAND, Blue Cross, said he thought there were a couple of            
 issues here:  what the existing law says, what the legislature                
 thought it said, and what the division says it says.                          
                                                                               
 He thought he heard the division say that the section in existing             
 law is really a mandate.  If you are on the list, you're mandated             
 to cover that scope of practice.  He suggested getting the                    
 division's interpretation of what the existing law is.  MR.                   
 REINWAND said he would like to know what this amendment does to               
 Blue Cross and other providers and does it mean they have to void             
 their existing PPO arrangement with Providence's other providers.             
 Third, he wanted to know the public policy on this and if this is             
 the right direction to go.  The whole trend is toward managed care            
 to try to bring costs down and this appears to be going in the                
 other direction.                                                              
                                                                               
 SENATOR DUNCAN said the real question on managed care is are we               
 really reducing costs or increasing costs by adding layers of                 
 bureaucracy.                                                                  
                                                                               
 MR. REINWAND said there is a question of discrimination within a              
 group and, then, whether it applies to Blue Cross or not is another           
 public policy question.  If it's discrimination between groups,               
 does that apply to services.  If a physician provides a service,              
 and an acupuncturist provides the same service and they get a bill            
 from both, do they say no to one and pay the other.                           
                                                                               
 SENATOR SALO said she wanted to know what the affect would be of              
 going to the generic language rather than the specific list.                  
 SENATOR KELLY said they would find that out for next Thursday and             
 adjourned the meeting at 3:05 p.m.                                            
                                                                               

Document Name Date/Time Subjects